Thursday, June 13, 2013

Today the public redacted version of Apple's response to the ITC's review questions, including its comments on the public interest, entered the U.S. trade agency's electronic document system (this post continues below the document):

The ITC usually orders an import ban if infringements of valid patents are found and the domestic industry requirement is satisfied. As the Office of Unfair Import Investigations (OUII, commonly referred to as the "ITC staff") stressed in its rebuttal of Google's public interest arguments against an exclusion order, the legal standard is not whether a ban would "advance" the public interest but whether there are public interest reasons for which this remedy would be denied. In other words, a ban is the norm, and scenarios in which a ban is against the public interest are rare exceptions. Apple argues that the requested exclusion order and cease-and-desist order (the latter one for products already imported when the order takes effect "would not conflict with public health, safety and welfare", "would not adversely affect the production of like or directly competitive articles in the U.S.", "would not adversely affect competitive conditions int he U.S. economy" and "would not adversely affect U.S. consumers", while the requested remedies "would benefit the public interest by encouraging domestic innovation through protection of intellectual property rights".

Apple backs Judge Pender's recommended bond (of 88% of Samsung's smartphone sales) and doesn't want the ITC to be too lenient and allow further infringement: "Samsung has had more than fair notices that its products infringe Apple's asserted patents. [Since the preliminary ruling issued in October 2012] Samsung has [...] already had more than seven months to transition to non-infringing designs and technology for its articles subject to an exclusion order." Apple also points to Samsung's claim to have workarounds in place and says "[e]ach Big Four carrier can switch to Apple smartphones, among several other supplier options, to replace excluded Samsung smartphones".

Apple's filing alleges lawless conduct on Samsung's part:

"By the time the Commission issues its Final Determination, this Investigation will be nearly two years old. During this entire length of this Investigation, Samsung has continued importing electronic digital media devices that infringe Apple's Patents-at-Issue, and Samsung is still importing such infringing devices. During the entire length of this Investigation, Apple has been significantly harmed by these unabated unfair acts. Further delay in providing Apple relief would effectively subsidize Samsung’s continued infringement of Apple's intellectual property, thus creating perverse incentives for infringers, such as Samsung, and disincentives for companies that have committed to innovation through domestic investment in research and development, such as Apple. The Commission should therefore decline to tailor remedial orders to delay implementation and should instead provide for such orders to go into effect as soon as possible."

One of the issues on which the parties disagree -- and on which the ITC staff clearly sides with Apple -- is whether an exclusion order would also relate to product categories that come with infringing features but weren't specifically at issue in this investigation. Here's Apple's position:

"1. Samsung's request that a limited exclusion order apply only to certain product categories is contrary to Commission precedent

Samsung has argued that a limited exclusion order should apply only to particular product categories accused by Apple, rather than to all infringing electronic digital media devices. [...] But this argument is contrary to Commission precedent and its standard practice of crafting exclusion orders to encompass all infringing products within the scope of the investigation, rather than only particular products or product categories. [...] ('[T]he scope of an ITC investigation is defined by the notice of investigation. Thus, any exclusion order may cover all products within that scope, i.e., 'the articles concerned.'' [...]

Here, in the Notice of Investigation, the Commission defined the scope of this investigation to include 'electronic digital media devices.' [...]
Therefore, consistent with the Commission's precedent and its standard practice, a limited exclusion order should cover all of Samsung’s infringing electronic digital media devices. Doing otherwise would arbitrarily cabin Apple's relief by permitting Samsung to continue infringing Apple's Patents-at-Issue, so long as it avoids doing so for a select few product categories. Moreover, affording Apple full relief against Samsung’s infringing products is particularly important because, as noted above, Samsung has continued to infringe Apple's asserted intellectual property rights to this day, and evidence shows that Samsung introduces '50 or more models' of mobile devices in the United States per year, such that it has ample opportunities to import new models that infringe Apple's patents. [...] On such facts, there is quite simply no basis in Commission law or practice to deny Apple the full scope of relief from Samsung's infringement."

For a point of reference, here's the related passage from the ITC staff's latest filing:

"Samsung does not appear to contest that a limited exclusion order is warranted if a violation is found, but has instead requested that any exclusion order 'be directed solely at those product categories for which Apple has shown a violation.' (RPostBr. at 274). The Judge rejected this argument. (RD at 2). OUII agrees with the Judge – such a restriction would not be consistent with Commission precedent. See, e.g., Certain Erasable Programmable Read-Only Memories, Inv. No. 337-TA-276 (Enforcement), Commission Opinion at 10-11 (Public Version Aug. 1, 1991) ('The Commission has always issued its orders in terms of 'infringing' products, and has always intended them, as in this case, to prohibit to [sic] future importation or sale of products which were not specifically judged infringing in the violation proceeding, but do in fact infringe. . . . It is an unusual case where the Commission makes specific determinations of infringement for all products which could be covered its exclusion order.') (footnote omitted)."

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About Me

Florian Mueller used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.